Update: President Obama signed the Executive Order on July 31, 2014.  A more in-depth discussion of this new E.O. and its implications can be found here.

A day after the House of Representatives voted in favor of filing a lawsuit against the President for allegedly overstepping his executive authority, the White House has announced there will be yet another Executive Order (E.O) aimed at federal contractors.  According to fact sheet, President Obama will soon sign an order requiring federal contractors to disclose whether they have committed any labor violations within the past three years. Employers with repeated or egregious violations would be restricted from receiving federal procurement contracts worth $500,000 or more.  “Labor law violations” would include any violation of the “14 covered federal statutes and equivalent state laws includ[ing] those addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections.”  According to the information provided by the White House, federal agencies will be directed to require contractors to monitor the same information from many of their subcontractors.   

Agency officials already are permitted to prevent the award of contracts to employers that have committed serious law violations.  The Fair Pay and Safe Workplaces E.O. would require agencies to designate a senior official as a Labor Compliance Advisor “to provide consistent guidance on whether contractors’ actions rise to the level of a lack of integrity or business ethics” and take this information into consideration in awarding new contracts.  The fact sheet explains that there will be a box on a standard bid form that contractors can check if they do not have a history of labor law violations.  

According to the White House, interested parties will be invited to listening sessions with the Office of Management and Budget (OMB), Department of Labor, and senior White House officials to provide input on shaping the policies and practices set forth in the impending E.O.  In theory, agencies will take these comments into consideration when drafting the E.O.’s implementing regulations.  The fact sheet states contractors with past violations “will be offered the opportunity to receive early guidance on whether those violations are potentially problematic and remedy any problems.” 

In addition, employers that require their employees to enter into mandatory arbitration agreements to resolve disputes regarding sexual discrimination, harassment or assault would be precluded from receiving contracts of $1 million or more. Defense contractors are already prevented from requiring such arbitration agreements. 

The E.O. will also include a wage and hour transparency component: “To be sure that all workers get this basic information, the Executive Order requires contractors to give their employees information concerning their hours worked, overtime hours, pay, and any additions to or deductions made from their pay, so workers can be sure they’re getting paid what they’re owed.” 

Finally, the E.O. will direct the General Services Administration to create a website that contractors can use to meet their reporting requirements. 

With respect to timing, the fact sheet states the E.O. is expected “to be implemented on new contracts in stages, on a prioritized basis, during 2016.”  

Other Measures Aimed at Federal Contractors

Efforts to penalize contractors for past violations are increasing. Notably, amendments that would effectively bar from federal contract employers that have committed Fair Labor Standards Act (FLSA) violations within the past five years were successfully included in at least four federal appropriations bills within the past couple of months. Such violations could include a finding of fault and liability in any civil, criminal, or administrative proceeding, including entering into wage and hour conciliation agreements or consent decrees that include a “finding of fault.”  It is unclear whether these amendments will survive Senate consideration. 

Legislative efforts aside, federal contractors have been on the receiving end of quite a few Executive actions this year.  Earlier this month, the President signed an E.O. preventing federal contractors from discriminating against their employees on the basis of sexual orientation or gender identity.  In February 2014, the President issued an E.O. setting the minimum wage of certain federal contractors at  $10.10 per hour starting January 1, 2015. In March, the White House issued a memorandum directing the Department of Labor to revise its “white collar” overtime exemption regulations.  

One month later, the President signed an E.O -- Non-Retaliation for Disclosure of Compensation Information  – making it unlawful for contractors to retaliate against employees who disclose their pay information. The same day the President issued a memorandum – Advancing Pay Equality Through Compensation Data Collection – directing the Department of Labor to issue regulations within 120 days that will require federal contractors and subcontractors to submit to the DOL summary data on the compensation paid their employees, including data by sex and race.   

Federal contractors have clearly borne the brunt of recent Administration actions. Contractors would be advised to prepare now for the changes to come.  Littler’s new Government Contractors Industry Group is available to assist. In addition, Littler’s Workplace Policy Institute will be involved in responding to this new E.O., and will be seeking input from the contractor community in crafting the response.